Would 'The Simpsons' Be Worth More Dead Or Alive?

RBC Capital Markets analyst David Bank raises that intriguing question in a report today based on some back-of-the-envelope calculations. He says Fox has been hamstrung by a 17-year-old deal that limits syndication to local TV stations. “At the time, cable was a relatively insignificant contributor to major off-network syndication revenues; but over the ensuing years, cable grew to be as big an opportunity as (if not bigger than) local broadcast,” Bank says. But if the show is canceled, then the restriction evaporates and Fox can offer reruns to additional markets — especially cable or an online service such as Netflix. Bank figures Fox can score $1.5M for each of 506 episodes. That delivers $750M and with a cash flow (EBIT) margin of 60%, and a tax rate of 35% it adds 10 cents in earnings for each News Corp share. 20th Century Fox TV wants to keep The Simpsons going but is playing hardball, saying that it “cannot produce future seasons under its current financial model.” The cast offered to take a 30% pay cut, but Fox wants 45%. Meanwhile, COO Chase Carey has said that the company is thinking about the possibility of launching a Simpsons cable channel. “We haven’t drawn up any plans for a Simpsons Channel. But there are a lot of Simpsons fans out there. … It’s a real opportunity for us to do something truly unique,” Carey told analysts last month.